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Congress' Income Guarantee Promise Will Increase Fiscal Deficit From 3.5% to 6%: Niti Aayog Vice Chairman

Rahul Gandhi announced that 20 per cent families belonging to the poorest category will be given Rs 72,000 each annually as minimum income if his party comes to power.

PTI

Updated:March 25, 2019, 9:07 PM IST
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Congress' Income Guarantee Promise Will Increase Fiscal Deficit From 3.5% to 6%: Niti Aayog Vice Chairman
Fille photo of NITI Aayog Vice Chairman Rajiv Kumar.
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New Delhi: Niti Aayog Vice-Chairman Rajiv Kumar on Monday said Congress party President Rahul Gandhi's promise of providing Rs 72,000 annually to five crore families if voted to power will create strong incentives against work and burst fiscal discipline.

At a press conference here, Gandhi announced that 20 per cent families belonging to the poorest category will be given Rs 72,000 each annually as minimum income if his party comes to power.

"True to its past record of promising the moon to win elections, Congress President announces a scheme that will burst fiscal discipline, create strong incentives against work and which will never be implemented," Kumar said.

Speaking to News18, he said he thinks the fiscal deficit could go up from 3.5 per cent to 6 per cent, if the scheme gets implemented. “All credit rating agencies will bring down our ratings, we will not get loans from outside, eventually our investments will be blocked,” he added.

Kumar said former finance minister P Chidamabaram had taken fiscal deficit from 2.5 per cent to 6 per cent in 2008, and the minimum income guarantee scheme would be the next step in that pattern. Chidambaram is leading the committee that came up with the proposal.

“Rahul Gandhi ji made the announcement without thinking its impact on economy, we will take 4 steps back due to this scheme,” he told News18.

In a tweet, Kumar said the cost of the minimum income guarantee scheme at 2 per cent of the gross domestic product and 13 per cent of the budget will "ensure" that real needs of people remain unsatisfied.

Kumar also said the Congress party had promised 'Garibi Hatao' in 1971, 'One Rank One Pension' in 2008, food security in 2013 to win elections, but could not fulfil any of those.

The "same unfortunate fate" awaits the populist and opportunistic promise of minimum income guarantee, he added.

Meanwhile, the Economic Advisory Council to the Prime Minister (EAC-PM) also criticised the pre-poll announcement by Gandhi in series of tweets, but later deleted them after it was pointed by a twitter user that they were in violation of the model code of conduct.

EAC-PM had tweeted that in the last five years, a lot of hard work has gone into striking the right balance between economic growth, inflation and fiscal discipline.

"INC's income guarantee scheme (as of 25/03/2019) would either upset this balance or severely cut critical government spending. Both options dangerous," it said.

The proposed income guarantee scheme fails the economics test, fiscal discipline test and execution test, it added.

When tweeter user @sumedhbhagwat pointed out to EAC-PM members that the tweets were in violation of the model code of conduct, Council's Chairman Bibek Debroy deleted the messages on the micro-blogging site.

"Tweets being deleted. Thanks for pointing out," Debroy said in a tweet. The Council consists of Ratan P Watal, Rathin Roy, Ashima Goyal and Shamika Ravi.

About 900 million are eligible to vote to elect the next Lok Sabha in seven-phased polling beginning April 11.
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